FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Please help mearrow_forwardZiggy Creations makes and sells a single product. Individual product details are as follows: Selling price $ 45 Direct materials $20 Direct labour $10 Fixed Costs $480 000 Estimated sales 36 000 units Production capacity 40 000 units a) Calculate the contribution margin per unit. b) Calculate the breakeven point in units. c) Calculate the expected profit from the estimated sales. d) If Ziggy’s required a profit of $90 000, what level of sales dollars would be required? e) Variable costs are to increase by $5 per unit. If Ziggy’s wants to maintain a profit of $90,000, what will be the required sales volume? Can Ziggy’s achieve this new estimated sales volume?arrow_forwardSherpa Manufacturing has the following income statement for 6,000 units:Sales $600,000Variable costs 360,000Contribution margin 240,000Fixed costs 80,000Net income $160,000 Using the information above: a. At what sales volume (in sales dollars) does Sherpa break even?b. At what sales volume (in units) does Sherpa break even?c. Given the income statement above, compute the margin of safety.d. What level of sales volume must be attained to reach net income of $200,000?e. What level of sales volume must be attained to reach net income of $180,000, assuming Sherpa had to pay income taxes at a rate of 40%?You may attach your workbook(s) to this answer and/or use the textbox belowarrow_forward
- Mierlo-Hout manufactures two types of video cameras, RC1 and RC2. The costs for the products are shown herebelow: RC1 RC2 Units sold 800 2,200 Unit sales price $200 $350 variable cost per unit Raw material Labor $60 $45 $90 $66 Total fixed costs = $40,000 Required: Compute the contribution margin per unit for each of RC1 and RC2. Assuming the fixed costs are allocated based on the units produced. Compute the selling price per unit of each type in order to achieve a profit margin of 40%. Assume that Mierlo-Hout has a maximum working labor capacity of 5,000 labor hours. Labour hours are paid at a rate of $30 per hour. Which of the two products RC1 or RC2 is most profitable for the company? Show all your calculationsin in a clear and organized manner.arrow_forward[The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively. Each product. uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 110,000 units of each product. Its average cost per unit for each product at this level of activity are given below: Direct materials Direct labor Variable manufacturing overhead Traceable fixed manufacturing overhead Variable selling expenses Common fixed expenses Total cost per unit Alpha $24 23 22 23 19 22 $ 133 Beta $ 12 26 12 25 15 17 $ 107 The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. 6. Assume that Cane normally produces and sells 97,000 Betas per year. What is the financial advantage (disadvantage) of discontinuing the Beta product line?arrow_forwardRap Corporation produces outdoor portable fireplace units. The following per unit cost information is available: direct materials $17, direct labor $20, variable manufacturing overhead $11, fixed manufacturing overhead $32, variable selling and administrative expenses $12, and fixed selling and administrative expenses $14. The company's ROI per unit is $26. (a) X Your answer is incorrect. Compute Rap Corporation's markup percentage using absorption-cost pricing. Absorption-cost pricing markup percentage 50 %arrow_forward
- What are the answers to Required 1, 2, and 3?arrow_forwardCaribann is a company with the potential to produce 100,000 units of its sole product annually. Caribann's interplay of costs and production capacity prompts an analysis that will guide it in navigating the balance between revenue generation and cost management. The following information is available: Selling price - -----------------------------------------------------$42 per unit Variable manufacturing costs -----------------------------------$24 per unit Fixed manufacturing costs---------------------------------------$360,000 annually Fixed marketing and administrative costs ---------------------$240,000 annually Variable marketing and administrative costs -----------------$4 per unit Required: In attempting to achieve better results in the marketplace, management has been looking at changing the reward system for marketing, distribution and sales personnel. This would result in an increase in variable marketing and administrative costs by $2 per unit, and would reduce fixed…arrow_forwardThe machining division of Cullumber International has a capacity of 2, 100 units. Its sales and cost data are:Selling price per unit$85Variable manufacturing costs per unit20Variable selling costs per unit4 Total fixed manufacturing overhead213, 300The machining division is currently selling 1,900 units to outside customers, and the assembly division of Cullumber International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $4/unit. If Cullumber's assembly division is currently buying from an outside supplier at $80 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price?arrow_forward
- Thank you for checking.arrow_forwardSunland Corporation produces outdoor portable fireplace units. The following cost information per unit is available: direct materials $20, direct labour $14, variable manufacturing overhead $17, fixed manufacturing overhead $24, variable selling and administrative expenses $9, and fixed selling and administrative expenses $16. The company's ROI per unit is $17. (a) Calculate Sunland Corporation's markup percentage using absorption-cost pricing. (Round answer to 2 decimal places, e.g. 15.25%.) Markup percentage eTextbook and Media Save for Later % (b) The parts of this question must be completed in order. This part will be available when you complete the part above.arrow_forwardPharoah Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as follows. Output in Units 1,000 2,000 Rent Cost $6,940 6,940 3,000 11,104 4,000 11,104 5,000 11,104 6,000 11,104 7,000 11,104 8,000 11,104 9,000 13,880 10,000 13,880 11,000 13,880 Direct Materials $5,550 6,000 6,000 8,000 10,000 12,000 14,000 16,000 40,668 48,580 61,072arrow_forward
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